EXHIBIT 10.1

                SEVERANCE AND SETTLEMENT AGREEMENT


     THIS SEVERANCE AND SETTLEMENT AGREEMENT (the "Agreement") is
made and entered into, freely and voluntarily, between WILLIAM H.
MALLENDER ("Mr. Mallender") and TALLEY INDUSTRIES, INC., a Delaware
corporation (the "Company").

     WHEREAS, Mr. Mallender has been employed by the Company as its
Chief Executive Officer; and

     WHEREAS, Mr. Mallender has resigned his employment with the
Company as well as his positions as officer and/or director with
the Company and each of its subsidiaries; and

     WHEREAS, the parties mutually wish to terminate the employment
relationship in a manner which is amicable and satisfactory to both
Mr. Mallender and the Company; and

     WHEREAS, Mr. Mallender and the Company are parties to an
Employment Agreement dated June 26, 1984, amended September 30,
1985; February 25, 1986; December 1,1988; February 27, 1990; and
April 1, 1995, (the "Employment Agreement") which they wish to
terminate and supersede with the terms of this Agreement.

     NOW, THEREFORE, for and in consideration of the acts,
payments, covenants and mutual agreements herein described and
agreed to be performed, Mr. Mallender and the Company agree as
follows:

     1.   TERMINATION,  Mr. Mallender's employment with the Company
terminated effective June 3, 1997, and he has no further duties,
powers, authority or responsibilities with respect to the business
or operation of the Company or any other subsidiary in the Company
Group. For purposes of this Agreement, "Company Group" means Talley
Industries, Inc., its subsidiaries, joint ventures, predecessors,
successors in interest, directors, officers, employees, legal
representatives and other agents.

     2.   SEVERANCE PAYMENT.  In consideration of the undertakings
and promises by Mr. Mallender set out in this Agreement, the
Company agrees to pay to Mr. Mallender the gross sum of Five
Million Ninety Four Thousand Five Hundred Thirty Four Dollars
($5,094,534.00), less required tax withholdings. It is acknowledged
by Mr. Mallender and the Company that said consideration, together
with the items and amounts set forth in paragraphs 3 and 4 hereof,
is in lieu of any sums due under Section 3 of the Employment
Agreement, any severance pay, incentive pay, accrued benefits, or
other compensation or payment of any type whatsoever to which
Mr. Mallender may be arguably entitled. This payment will be made
within two business days of the execution of this Agreement by both
parties. 

     
     
     
     
<PAGE>     

     3.   BENEFITS.  Mr. Mallender's participation in Company-sponsored plans 
and benefits shall continue/terminate as follows:

          (a)  Health Coverage.  Mr. Mallender and Carole
     Mallender will receive medical benefits in accordance
     with the terms and conditions of the executive officer
     retiree medical program in effect from time to time for
     executive retirees.  The program will provide for
     reimbursement for Mr. Mallender and Carole Mallender of
     all reasonable and necessary medical care, provided the
     expense of such care is considered a "medical expense"
     under section 213(d) of the Internal Revenue Code of 1986, and
     such treatment is not experimental. There is no
     deductible, no co-insurance and no lifetime maximum. Once
     Mr. Mallender or his wife reach age 65, Medicare or its
     equivalent becomes the primary payor for any medical
     expenses.

          (b)  Retirement Benefits.  Mr. Mallender's
     retirement benefits and coverage will be determined in
     accordance with the current terms of the Company
     qualified retirement plan based on a termination date of
     June 3, 1997. Mr. Mallender's participation in the
     Company's 401(k) plan, Talley Savings Plus, shall cease
     as of June 3,1997.

          (c)  Supplemental Retirement Benefit.  Within seven
     (7) days from the date of the execution of this Agreement
     by all parties, the Company will pay Mr. Mallender the
     gross sum of Fifty-Seven Thousand Eight Hundred Seventy-One 
     Dollars ($57,871.00), less applicable tax withholdings, 
     as a one-time supplemental retirement benefit.

          (d)   Retirement Life Insurance.  Mr. Mallender will
     be provided with retiree life insurance benefits with a
     face value of $990,000 for his life in accordance with
     the executive officer retiree life insurance program in
     effect from time to time for executive retirees.

          (e)  Restoration Benefit Plan.  Mr. Mallender shall
     have no right to further participation in or benefit from
     the Company's Restoration Benefit Plan, and the Company
     hereby waives all claims against Mr. Mallender for
     repayment of any amounts previously paid to Mr. Mallender
     under the Restoration Benefit Plan.

          (f)  Split Dollar Insurance Policies.  Within seven
     (7) days of the execution of this Agreement by all parties 
     (or three (3) days after receipt of a final payoff calculation 
     from Jackson National Life Insurance Company, if later), 
     
     
     
     
     
     
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<PAGE>
     
     the Company will make a single, lump-sum premium payment 
     sufficient to fully pay up the premiums on the Jackson National 
     life insurance policy presently in Mr. Mallender's name in the 
     face amount of One Million Seven Hundred Fifty Thousand Dollars 
     ($1,750,000.00) and relinquish any claims it has under
     the policy. Upon such assignment by the Company and the
     receipt by Mr. Mallender of the sums set forth in Section
     2 of this Agreement Mr. Mallender will transfer to the
     Company all of his right, title and interest in and to
     the Sun Life insurance policy in his name in the face
     amount of Eight Hundred Thousand Dollars ($800,000.00)
     and relinquish any claims he has under the policy.

          (g)  Long-Term Disability.  The Company will
     continue to pay the annual premium(s) for Mr. Mallender's
     individual long-term disability policy issued by
     Maccabees until he reaches age 65, and the Company shall
     not thereafter have any obligations with respect to said
     coverage.

          (h)  Employee Group Life Insurance.  Mr. Mallender
     may participate in the Company's employee group term life
     insurance plan at his expense until age 65, pursuant to
     the terms and conditions of the plan as they may be
     amended; provided, however, that Mr. Mallender pays all
     premiums for such insurance within thirty (30) days after
     receiving notice that such premiums are due; and provided
     further that coverage under such plan cannot be
     reinstated once it has lapsed for nonpayment of premiums
     due.

          (i)  Stock Options.  Mr. Mallender may participate
     in the Company's Stock Option Plan pursuant to the terms
     of his existing grant letters dated March 20, 1990.

4.   OTHER CONSIDERATION.  In further consideration of the
undertakings and promises set out in this Agreement, Mr. Mallender
shall also receive the following benefits:

          (a)  Executive Auto. Within seven (7) days from the
     date of the execution of this Agreement by all parties,
     the Company will transfer to Mr. Mallender title in the
     Company-owned Chevrolet Suburban automobile presently in
     his possession.

          (b)  Club Dues.  Within seven (7) days from the date
     of execution of this Agreement by all parties, the
     Company will pay Mr. Mallender the sum of Four Thousand
     Dollars ($4,000.00) as reimbursement for one year's
     country club dues.

          
          
          
          
          
                                 3
          
<PAGE>          
          
          (c)  Office and Secretarial Assistance.  Within
     seven (7) days from the date of execution of this
     Agreement by all parties, the Company will pay Mr.
     Mallender the sum of Twenty Thousand Dollars ($20,000.00)
     for future office expenses and will permit Mr. Mallender
     to retain his present personal office furniture as
     further described in Exhibit A hereto, but excluding art
     work and corporate office conference room furnishings.
     The Company will at its sole cost and expense also
     provide Mr. Mallender with executive secretarial
     assistance by Jean Ostrander for the period ending on
     December 31, 1997.

          (d)  Attorneys' Fees.  Promptly upon receipt of
     appropriate supporting documentation and demand, the
     Company will reimburse Mr. Mallender for his attorneys'
     fees incurred in connection with the termination of Mr.
     Mallender's employment and review and negotiation of this
     Agreement in the maximum amount of Ten Thousand Dollars
     ($10,000.00).

          (e)  Travel and Outplacement Expenses.  Promptly
     upon receipt of appropriate supporting documentation the
     Company will reimburse Mr. Mallender for the reasonable
     job search travel and outplacement expenses actually
     incurred by him in the maximum amount of Ten Thousand
     Dollars ($10,000.00).

          (f)  Reimbursement of Corporate Expenses.  The
     Company will reimburse Mr. Mallender for all documented
     business expenses incurred by Mr. Mallender for a proper
     Company purpose after March 31, 1997 but before June 4,
     1997 which have not been previously reimbursed.

     5.   INDEMNIFICATION.  The Company and Mr. Mallender
acknowledge and agree that the Indemnification Procedures Agreement
dated August 25, 1993 between the Company and Mr. Mallender is in
full force and effect, and is not terminated or modified by this
Agreement. Talley Manufacturing and Technology, Inc. ("Talley
Manufacturing") and Mr. Mallender acknowledge and agree that the
Indemnification Procedures Agreement dated August 25,1993 between
Talley Manufacturing and Mr. Mallender is in full force and effect,
and is not terminated or modified by the Agreement. These
Agreements are referred to herein as the "lndemnification
Agreements." The Company acknowledges that Mr. Mallender's services
as director, officer, employee, agent and/or representative of each
member of the Company Group was at the request of the Company.

     6.   RELEASE BY MR. MALLENDER.  Mr. Mallender hereby releases,
acquits and forever discharges the Company Group of and from any
and all actions, causes of action, claims, damages, expenses or
costs of whatever nature, known or unknown, that he might now have,




                                 4

<PAGE>

that he has had or that might subsequently accrue to him,
including, but not limited to, any and all claims arising out of
his employment with the Company Group and the termination thereof,
any and all claims for vacation, holiday, incentive, bonus or
severance pay, any and all claims arising under any Company Group
employment contract, policy or practice, any and all claims arising
under Title Vll of the Civil Rights Act of 1964, 42 U.S.C.
Section 2000(e), et seq., the Age Discrimination in Employment Act, 29
U.S.C. Section 621, et seq., the Fair Labor Standards Act, 29 U.S.C. 
Section 201, et seq., the Arizona Civil Rights Act, A.R.S. Section 
41-1401 et seq., and any other federal, state or local statute or 
ordinance, and any claims or causes of action Mr. Mallender has had 
or may have had regarding any mistreatment, discrimination, negligence, 
malfeasance, wrongful or negligent discharge, breach of contract, breach 
of express or implied covenant, libel, slander, intentional or negligent 
infliction of emotional distress, or any other wrongdoing or illegality 
by the Company Group regarding the termination of Mr. Mallender's employment 
or his treatment while employed by the Company, provided, however, that 
Mr. Mallender does not hereby release, acquit or discharge any claim for 
(i) breach of this Agreement, (ii) failure to pay benefits to which he is 
entitled under existing benefit plans, programs and agreements listed in 
paragraph 3 of this Agreement, (iii) indemnification under applicable law 
or the articles of incorporation or bylaws of any member of the Company 
Group, and (iv) breach or default under the Indemnification Agreements.

          Mr. Mallender further covenants and agrees never to join
in or commence any action, suit or proceeding, in law or in equity,
or before any administrative agency or to incite, encourage or
participate in any such action, suit or proceeding against the
Company Group in any way pertaining to or arising out of his
employment by and with the Company Group or the termination of his
employment, except as otherwise provided in this Agreement.

     7.   RELEASE BY THE COMPANY GROUP.

          (a)  Except as set forth in subparagraph (b) below,
     each corporate member of the Company Group hereby
     releases, acquits and forever discharges Mr. Mallender of
     and from any and all actions, causes of action, claims,
     damages, expenses or costs of whatever nature, known or
     unknown, that it might now have, that it has had or that
     might subsequently accrue to it, including, but not
     limited to, any and all claims arising out of Mr.
     Mallender's employment with any member of the Company
     Group, including loss or injury to the Company Group
     occasioned by ill-advised good faith judgment or
     negligence in connection with the Company's business, up
     to the effective date of this Agreement; provided,
     however that no member of the Company Group waives any
     claim for breach of this Agreement or, until December 31,
     1997, any Unreleased Claim which is discoverable before
     that date through reasonable due diligence. An Unreleased
     
     
     
     
                                 5
     
<PAGE>     
     
     Claim shall mean a claim a member of the Company Group
     has against Mr. Mallender arising out of misconduct by
     Mr. Mallender in his capacity as director, officer, or
     employee of such member of the Company Group which shall
     have caused a loss to such member of the Company Group or
     pursuant to which Mr. Mallender or a third party shall
     have received an improper personal benefit as, for
     example, but not limited to, embezzlement,
     misappropriation of a corporate opportunity, wrongful
     conversion of tangible or intangible corporate property
     for his or a third party's benefit, or causing a member
     of the Company Group to enter into an agreement with Mr.
     Mallender or any third party affiliated with Mr.
     Mallender or any entity in which Mr. Mallender or such
     affiliated third party has a financial interest without
     requisite disclosure and board approval of such
     agreement. An Unreleased Claim shall be made by written
     notice to Mr. Mallender on or before December 31, 1997,
     which notice sets forth with reasonable specificity the
     facts upon which the Claim is based and the amount or
     estimated amount of the loss suffered by the Company
     Group or the amount of improper personal benefit
     received. The Company Group agrees that any Unreleased
     Claim which is discoverable through reasonable due
     diligence by December 31, 1997 which shall not have been
     properly brought in accordance with the prior sentence
     shall be forever released, acquitted and discharged as of
     five o'clock p.m. Mountain Standard Time, December 31,
     1997. The term "Unreleased Claim" shall not include any
     claim for loss or injury to the Company Group occasioned
     by ill-advised good faith judgment or negligence in
     connection with the Company's business or any claim for
     reimbursement due a member of the Company Group where the
     claim relates to expense reports submitted by Mr.
     Mallender during his employment with the Company Group.

          (b)  This release does not act in any way to
     release, waive, or discharge any claim a member of the
     Company Group may have against Mr. Mallender for fraud or
     criminal violations of state or federal laws. The time
     for asserting such a claim is limited only by the
     applicable state or federal statute of limitations.

8.   COOPERATION.

          (a)  The Company Group may, from time to time,
     require Mr. Mallender's cooperation in providing a member
     of the Company Group with documentary or testimonial
     information. Mr. Mallender agrees to cooperate fully and
     completely with such requests.






                                 6

<PAGE>

          (b)  If Mr. Mallender has knowledge or is alleged to
     have knowledge of any matters which are the subject of
     any pending, threatened or future litigation involving
     the Company, Mr. Mallender will make himself available to
     testify if and as necessary. Mr. Mallender will also make
     himself reasonably available to the attorneys
     representing the Company in connection with any such
     litigation for such purposes as they may deem necessary,
     including but not limited to the review of documents,
     discussion of the case and preparation for trial. This
     Agreement is not intended to and shall not be construed
     so as to in any way limit or affect the testimony which
     Mr. Mallender gives in any such litigation; it is
     understood and agreed that Mr. Mallender will at all
     times testify fully, truthfully and accurately, whether
     in deposition, trial or otherwise. The Company will
     reimburse Mr. Mallender for any reasonable out-of-pocket
     expenses incurred by him in making himself available to
     the Company or the attorneys referred to in this
     paragraph.

     9.   NON-COMPETITION.  Mr. Mallender shall not for a period of
one (1 ) year following the effective date of this Agreement engage
or participate directly, or indirectly, either as a principal,
agent, employee, employer, consultant, stockholder, director,
copartner, or in any other individual capacity, in the conduct or
management of, or own any stock or other proprietary interest in,
any business which at the time competes with the business of the
Company Group as it exists on the date of this Agreement unless he
shall have obtained the prior consent thereto of the Board of
Directors of the Company, except that Mr. Mallender shall be free
without such consent to make reasonable investments in any
publicly-owned company so long as he does not become a controlling
party in such company.

     10.  CONFIDENTIALITY OF INFORMATION.   Mr. Mallender agrees
that he will not for a period of three (3) years following the
effective date of this Agreement either directly or indirectly,
except as authorized in writing on behalf of the Company, disclose
or communicate to any person, individual, firm or corporation, any
non-public information of any kind concerning any matters affecting
or relating to the business of the Company Group, including without
limitation, any of the customers, prices, sales, manner of
operation, plans, trade secrets, processes, financial or other data
of the Company Group, without regard to whether any or all of such
information would otherwise be deemed material.

     11.  TAXABILITY OF SETTLEMENT MONIES.          
     
          (a)  The Company agrees to pay Mr. Mallender an
     additional amount equal to the quotient of: (i) the total
     amount of any excise taxes assessed against Mr. Mallender
     under Section 4999 of the Internal Revenue Code and any
     
     
     
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<PAGE>     
     
     corresponding state tax ("Golden Parachute Taxes") by
     reason of his receipt of the settlement consideration
     tendered under this Agreement; divided by (ii) one minus
     the maximum combined federal and state income tax rate
     applicable to Mr. Mallender for 1997 (as stated as a
     fraction). Such payment shall be made by the Company
     within five (5) days after its receipt from Mr. Mallender
     of a copy of the applicable taxing authority's final
     determination.

          Mr. Mallender shall have no duty to contest or
     defend any assessment or proposed assessment of Golden
     Parachute Taxes. If the Company desires to contest or
     defend any such assessment or proposed assessment, Mr.
     Mallender shall cooperate fully, including, without
     limitation and where appropriate, the execution and
     filing of any and all consents, waivers, extensions of
     any applicable statutes of limitations, powers of
     attorney and other documents as shall be reasonably
     requested by the Company in connection with such contest;
     and Mr. Mallender further agrees, as and to the extent
     reasonably requested by the Company, to use his best
     efforts to obtain any certificate or other document from
     any federal or state taxing authority, or any other
     person, as may be necessary to mitigate, reduce or
     eliminate any such Golden Parachute Taxes; provided,
     however, that all costs incurred in connection with or
     related to any such audit, litigation or other proceeding
     shall be at the sole cost of the Company, and the Company
     shall indemnify and hold Mr. Mallender harmless from,
     against and in respect of any such costs incurred in
     connection therewith. Nothing contained in this
     paragraph 11(a) shall be construed to impose a duty on
     the Company to contest against any such assessment or
     proposed assessment.

          (b)  Except as provided in paragraph 11(a) above,
     Mr. Mallender shall be solely responsible for the payment
     of all federal and state income taxes and penalties
     assessed against him, and agrees to indemnify and hold
     the Company harmless in the event that any taxing
     authority seeks payment from the Company of any
     additional taxes, interest, penalties or assessments owed
     by Mr. Mallender.

     12.  RELIANCE.  Mr. Mallender warrants and represents that:
(i) he has relied on his own judgment regarding the consideration
for and language of this Agreement; (ii) he has been given a
reasonable period of time to consider said Agreement and has been
advised to consult with legal counsel of his own choosing before
signing this Agreement which he has done; (iii) no statement made
by the Company has in any way coerced or unduly influenced him to
execute this Agreement; and (iv) this Agreement is written in a
manner that is understandable to him and he has read and understood
all provisions of this Agreement.

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<PAGE>     
     
     13.  ARBITRATION.  Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
by arbitration in Phoenix, Arizona (using three or more
Arbitrators) in accordance with the Rules of the American
Arbitration Association. The prevailing party in any arbitration or
other legal proceeding pertaining to this Agreement shall recover
from the other party its reasonable attorneys' fees in such
proceeding. The parties agree that judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction
thereof.

     14.  RETURN OF COMPANY PROPERTY.  Mr. Mallender further
represents and agrees that he has returned or, within ten (10) days
after his execution hereof, will return to the Company all
equipment and other property belonging to it (including, without
limitation, business credit cards, building passes and building
keys), which have been or is in his care, custody, possession or
control, except as otherwise provided in this Agreement.

     15.  NON-ADMISSION OF LIABILITY.  By entering into this
Agreement, neither party admits to any liability or wrongdoing
whatsoever.

     16.  CONFIDENTIALITY OF AGREEMENT.  The Company Group and Mr.
Mallender agree to keep confidential the terms and existence of
this Agreement, as well as the content of the negotiations Which
led to this Agreement, unless and to the extent disclosed in
filings with the Securities Exchange Commission or other
governmental agencies or otherwise required by law.

     17.  ENTIRE AGREEMENT.  This Agreement and all provisions
thereof, including all representations and promises contained
herein, are contractual and not a mere recital and shall continue
in permanent force and effect. This Agreement constitutes the sole
and entire agreement of the parties in respect to the subject
matter hereof, superseding all prior agreements and understandings
between the parties, and there are no agreements of any nature
whatsoever between the parties hereto except as expressly stated
herein. This Agreement may not be modified or changed unless done
so in writing and signed by both parties.

     18.  SEVERABILITY.  Should any part, term or provision of this
Agreement be declared or determined by any court to be illegal or
invalid, the validity of the remaining parts, terms or provisions,
shall not be affected thereby and said illegal or invalid part,
term or provision shall be deemed not to be a part of this
Agreement.

     19.  OTHER INSTRUMENTS.  The parties expressly agree to
execute any and all further or additional instruments as may
reasonably be required, and to perform any other act necessary, to
effectuate and carry out the purposes of this Agreement.




                                 9

<PAGE>

     20.  CHOICE OF LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona.

     21.  DUE AUTHORIZATION.  The Company represents that this
Agreement has been duly authorized by each corporate member of the
Company Group and has been duly executed by authorized officers of
each corporate member of the Company Group.




                            /s/   William H. Mallender           
                            --------------------------------------         
                                  WILLIAM H. MALLENDER        

Date:   June 21, 1997 
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
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<PAGE>                                     
                                     
                             TALLEY INDUSTRIES, INC.     


                             By:   /s/  Paul L. Foster           
                                   --------------------------------
                             Its:    Chairman of the Board    

Date:   6 /21/97  

     THE FOLLOWING CORPORATE MEMBERS OF THE COMPANY GROUP AGREE TO
THE PROVISIONS OF PARAGRAPHS 6, 7, 8, 9, 10 AND 16:

                             AMCAN SPECIALTY STEELS, INC.;                
                             DIMETRICS, INC; ELECTRODYNAMICS, INC.;  
                             JOHN J. MCMULLEN ASSOCIATES, INC.;       
                             LME CAPITAL CORPORATION; NEW              
                             CALIFORNIA CORP.; PORCELAIN PRODUCTS  
                             CO.; ROWE INDUSTRIES, INC.; TALLEY         
                             AUTOMOTIVE PRODUCTS, INC.; TALLEY       
                             CANADA, INC.; TALLEY DEFENSE                 
                             SYSTEMS, INC.; TALLEY INTERNATIONAL     
                             INVESTMENT CORPORATION; TALLEY          
                             INTERNATIONAL SALES CORPORATION;       
                             TALLEY MANUFACTURING AND                   
                             TECHNOLOGY, INC.;TALLEY METALS            
                             TECHNOLOGY, INC.; TALLEY REAL ESTATE   
                             COMPANY, INC.; TALLEY REALTY                
                             DEVELOPMENT, INC.; TALLEY REALTY          
                             FINANCE AND INVESTMENT COMPANY, INC.;
                             TALLEY REALTY HOLDING COMPANY,          
                             INCORPORATED; TALLEY REALTY                
                             INVESTMENT GROUP, INC.; TALLEY             
                             TECHNOLOGY, INC.; UNIVERSAL                  
                             PROPULSION COMPANY; WATERBURY         
                             COMPANIES, INC.; WDC, INC.                     
 


                             By: /s/    Mark S. Dickerson                       
                                -----------------------------------
                                        Mark S. Dickerson                      
                                        Secretary                               
Dated: June 21, 1997







                            





                                 11

<PAGE>

                              EXHIBIT A


     Property No.   Description
     ------------   -----------

     C8337          Executive Desk
     C8337A         Executive Credenza
     C8337B         Executive Swivel Chair
     C8337C         Executive Breakfront (not including dishes or
                      other display items)
     C8337D         Cocktail Table
     C8337E         Sofa
     C8337F         Wing Chair
     C8337G         Wing Chair
     C8337H         Guest Arm Chair
     C8337I         Guest Arm Chair
     C8337J         Lamp
     C8337K         Lamp
     C8337L         Brass Horse Lamp
                    "Ship Display" Table
                    Lamp table
                    Lamp table
                    Plant Stand
                    Planter Box
                    Planter Box
                    Wall Thermometer
                    Waste Basket
                    Square Brass Planter Box
                    Round Brass Planter Box
     C83A33Y        5 Drawer Lateral File*
     C83A332        5 Drawer Lateral File*
     85002          4 Drawer Fire Proof File*
     85R01          GE Refrigerator w/ice maker*
     95601A-C       HP Vectra 486DX66 w/monitor & printer*
     95606          Panasonic P/75 Laptop PC*
     93615          486/33 Insight PC*
     93616          486/33 Insight PC*
     93617          HP LaserJet 4 Printer*
     90607          Xerox 6240 Word Processor*
                    2 fax machines*


* Items already in the possession of Bill Mallender or Jean Ostrander 












                                 12

<PAGE>

                        CONSENT OF SPOUSE
                        -----------------


     The undersigned spouse of William H. Mallender who is a party
to that certain Severance and Settlement Agreement (the
"Agreement") with Talley Industries, Inc., a Delaware corporation
(the "Company"), executed as of June  21 , 1997, hereby declares
that she has read the Agreement in its entirety, and being fully
convinced of the wisdom and equity of the terms and conditions of
the Agreement, and in consideration of the recitals and of the
provisions of the Agreement, hereby expresses her acceptance of the
same and does agree to its provisions.
     The undersigned further agrees that the provisions of the
Agreement shall be binding upon her to the extent of any interest
which she has or may have in the subject matter of the Agreement.
     The undersigned further agrees that she will at any time make,
execute and deliver such instruments and documents which may be
necessary to carry out the provisions of the Agreement.
Furthermore, the undersigned agrees that in the event of divorce,
in lieu of an interest in the subject matter of the Agreement, she
shall accept other assets of the marital estate of equal value.
     This instrument is not a present transfer or release of any
rights which the undersigned has or may have due to her marriage.

     DATED as of the 21  day of June, 1997.
                                

                                
                                /s/   Carole Mallender           
                                ----------------------------------         
                                      CAROLE MALLENDER        

SUBSCRIBED AND SWORN to before me this  21  day of June, 1997,
by Carole Mallender.



                                /s/   Rillia R. Cray                
                                ----------------------------------           
                                      NOTARY PUBLIC           



My Commission Expires:                            OFFICIAL SEAL

       July 25, 1998          
------------------------------